The 4 components or determinants of aggregate demand
What will be an ideal response?
1) government spending
2) consumer spending
3) net export spending
4) investment spending
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Identify the correct statement
A) Countercyclical monetary policy stimulates the economy during a recession by shifting the labor demand curve to the left. B) Countercyclical fiscal policy stimulates the economy during a recession by shifting the labor demand curve to the left. C) Countercyclical monetary policy slows down the growth rate of an economy during an expansion by shifting the labor demand curve to the right. D) Countercyclical fiscal policy stimulates the economy during a recession by shifting the labor demand curve to the right.
Which of the following is a possible consequence if a contractionary monetary policy is adopted?
A) The demand for labor will increase. B) The aggregate price level will rise. C) Real output will increase if nominal wages are fixed. D) Real wages will increase if nominal wages are fixed.
Differences in the taxation of returns
A) only affect the yields of illiquid credit market instruments. B) have a negligible effect on the yields of credit market instruments. C) only affect the yields of high-information cost credit market instruments. D) create differences in yields among credit market instruments.
When the Fed is pursuing expansionary monetary policy it will tend to reduce the demand for the dollar and increase net exports, other things equal
a. True b. False Indicate whether the statement is true or false